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Modernizing the Antitrust Landscape in the Age of Tech Giants

F or over 100 years, US antitrust laws have sought to enforce the same basic objective: Protect competition for the benefit of consumers by making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up.1 As such, antitrust law has remained virtually unchanged for the last 30 years.

However, on September 13, 2018, the Federal Trade Commission (FTC) began a series of hearings on “Competition and Consumer Protection in the 21st Century” to examine whether there is a need to adjust competition and consumer law, enforcement priorities, and policy. In general, the hearings are a response to the evolving business practices, technological advances, economic shifts, and current state of international relations. More specifically, much of the conversation will center around the effects of digital economy giants like Amazon, Facebook, Google, and Twitter on the antitrust landscape.

These companies have been under increased scrutiny by legal scholars and government officials for their perceived influence on competition. Amazon especially has been accused of having a disproportionate effect on wages, inflation, and growth. Lina Khan published the essay “Amazon’s Antitrust Paradox” in the Yale Law Journal in 2017 arguing that Amazon has an inherent advantage that undermines fair competition because it is simultaneously the manufacturer, retailer, marketing platform, payment service, and delivery network, amongst a variety of other roles.

Also in 2017, Rep. David Cicilline of Rhode Island, a democrat on the subcommittee on Regulatory Reform, Commercial, and Antitrust Law, called for hearings regarding Amazon’s US$14 billion purchase of Whole Foods.2 Meanwhile, Google was accused by US President Trump via Twitter of skewing search results, and the US Department of Justice may investigate whether it and other sites are biased against conservative voices.

The companies and antitrust lawyers have responded with a number of rebuttals. Amazon has added hundreds of billions of dollars to the US economy, advancing retail and technology sectors while representing less than one percent of global retail.3 Its low prices and client satisfaction fulfill the concept of consumer welfare. Additionally, the implementation of regulations could be difficult and ineffective given the rapidly changing nature of the technology market — the regulations could become quickly outdated — and the vulnerabilities to political will.

Perhaps in response to worries about political influence, FTC Chairman Joseph Simons stated during the FTC’s inaugural hearing that the “basing antitrust policy and enforcement decisions on an ideological viewpoint (from either the left or the right) is a mistake.”4

Chairman Simons also cited research that the US economy has become more concentrated and less competitive over the past three decades, and he acknowledged arguments that the government should take into consideration inequality and wages in competition rule enforcement. However, he cautioned:

“The use of economics should not be thought of as a one-way ratchet, only driving down the level of antitrust enforcement. Good economics might point us toward more or less enforcement, depending on the facts and analysis in front of us.”5

While two sessions of the hearing have taken place so far (September 13 and 21), they are just the beginning. The hearings are expected to continue through January 2019 and total 15 to 20 sessions. At this early stage, it is difficult to predict whether these hearings will result in substantive to change to current antitrust policy.

According to The New York Timesanalysis of the first hearing, there is unlikely to be any new regulations in the United States in the near future, and any federal policies that are implemented will most likely be less stringent than those in Europe and some US states, such as California.

In addition to staying informed, in-house counsel can also participate in the hearings. The FTC invites public comments throughout the term of the hearings; the comments may address the topics of the hearings in respect to a specific industry. 

About the Author

Danielle Maldonado is the editorial coordinator of the Association of Corporate Counsel.

The information in any resource collected in this virtual library should not be construed as legal advice or legal opinion on specific facts and should not be considered representative of the views of its authors, its sponsors, and/or ACC. These resources are not intended as a definitive statement on the subject addressed. Rather, they are intended to serve as a tool providing practical advice and references for the busy in-house practitioner and other readers.